Fred Stanford
Director, President & CEO
Torex Gold Resources, Inc.
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View from the Top

Mexican Mining Sector Needs Predictability

By Alejandro Ehrenberg | Mon, 04/20/2020 - 13:21

Q: How has your experience at Torex Gold changed your view of mining?

A: The experience at Torex has reconfirmed a belief as to what is possible in mining.  When we started Torex, the vision was to build a company based on social models called Systems Leadership Theory. The goal was to create an internal experience of the company that led to employees willingly giving their best, and an external experience of the company that led to communities, investors, and stakeholders wanting the company to succeed. I believe that we have achieved this, and that has reconfirmed the belief that this is possible in a mining company. We have a very productive and committed team that clearly gives their best. This is evident in the production results, but also in the safety performance. As a team we recently crossed a threshold of 5.5 million hours worked without injury lost time. I have seen teams deliver 1 million lost time injury free hours. I have never heard of a mining team that has achieved 5.5 million hours and counting. Our team is firing on all cylinders, in every aspect of the mining experience.

As for the underlying System Leadership Theory, it was invented by Dr. Ian MacDonald, who established a model that allows predicting of human behavior in an organizational setting. One model explains that there are six different values that members of any culture will judge another human against. These are whether the person being judged is honest, trustworthy, respectful, loving, fair and courageous. Different cultures may judge the same actions differently, but they will all use the same fundamental values to judge. The prediction of human behavior comes in understanding that members of a culture will only follow your lead if they see you positively against these values. Understanding these models and behaving accordingly has helped us build a very positive organization that is well received by employees and external stakeholders.

Q: Do mining companies create a positive ripple effect in the environment where they work?

A: Absolutely. Mining companies often operate in areas with limited choices for economic activity. We provide training and skills development that leads to confidence to branch out to new opportunities. We provide opportunities for entrepreneurs to start new businesses. Mining companies often support local education initiatives, which increases the options available for the next generation. The opportunity for the next generation to find employment close to home can slow down migration and keep families together. Safety training at work leads to safer behaviors at work. It also leads to increased risk awareness and improved safety behaviors at home. Protections for the environment that are learned at work tend to be applied off the job as well. The list of ripple effects goes on and on. Mining companies often operate in areas where these ripples can lead to very positive changes in the lives of families.

Q: How does the Canadian mining community view the mining industry in Mexico and what is your outlook for Mexico?

A: Mining involves very large capital investments that are not portable. If conditions in an area make it impossible to achieve a return on investment, a mining company cannot pack up the assets and go elsewhere.  As such, mining companies anywhere need predictability. At the moment predictability is in short supply in Mexico when it comes to political decision making and security. In such a political and security environment, investors find it hard to conclude that their teams will be safe and that they will make a return on their investment. Absent that conclusion, they go elsewhere to make an investment. I believe that there is ample evidence of a trend to invest elsewhere. Mining investment in Mexico is in serious decline.

My outlook could be described as worried. We have a large investment to make in the next few years if the life of our mining assets in Guerrero is to be extended. The resources we can mine have great potential. The surrounding communities are supportive. Our teams are productive, and their safety performance is the envy of many in the industry. We can manage through changes in labor laws and changes in outcomes related to indigenous rights. There is a great deal that is positive about mining in Mexico. However, we come back to predictability, especially concerning taxes and security. At the moment, we are in wait and see mode. We have no choice but to make alternative investment plans to deal with the possibility that the current level of unpredictability increases.

Q: What are the solutions for bottlenecks that appear in mining production processes?

A: The primary product of a mine is metal containing rock. A production system is a linear series of processes that either transform the primary product, transport it or store it. There is always a bottleneck and it is going to be one of those processes. The path to increasing the performance of the bottleneck process starts with understanding where it is. In my experience the bottleneck in the mine tends to be one of the transport processes. In the processing plant, it tends to be one of the transformation processes. Once the bottleneck process is identified, one approach is to keep the process fundamentally the same but apply continuous improvement techniques to it. An alternative approach is to completely redesign the process. Find a different way of achieving the expected outcome of the bottleneck process, whether its outcome is transformation, transport, or storage. In mining, this is what we have done with our Muckahi Mining System.

Q: What have been the main developments in the Muckahi Mining System since its release in 2019?

A: The testing process for Muckahi is a staged approach and each stage to date has delivered very positive outcomes. We started by testing the aspects of the system that we felt had the highest risk of failure. The philosophy was “If you are going to fail, then fail early and fail cheap.” Therefore, we tested the highest risk components first.

We felt that the highest risk of failure was in the tunneling equipment that operates from a monorail supported from the roof by chains. The drilling operation could put a lot of different forces on that monorail and we needed to know that equipment could be kept stable within the range of potential forces applied to it. The engineered solutions have been thoroughly tested under extreme conditions and the test results have been very positive. We then worked our way through lower risk aspects of the system. One of these was perfecting the blasting techniques (transformation process) to achieve ‘conveyable size’ pieces of rock (transport process).  These tests have also been successful. In 2020, we will continue to repeat the testing that we did in 2019 to increase the database of results. We will also branch out to testing additional processes in the system, such as loading rock onto a conveyor that is inclined at 30 degrees. 

Torex Gold is an intermediate gold producer based in Canada. It is engaged in the exploration, development and operation of its 100 percent-owned Morelos gold property, an area of 29,000ha in the highly prospective Guerrero Gold Belt. 

 

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst